NI Reports Third Quarter Results

This news release discloses the company’s EBITDA for the three and nine months ended September 30, 2020 and 2019. The company believes that including the EBITDA results assists investors in assessing the company’s operational performance relative to its competitors. A reconciliation of EBITDA to GAAP net income is included with this news release.

Forward-Looking Statements

This release contains “forward-looking statements” including statements regarding we have and will continue to take a broad range of actions to ignite growth; building on our unique software position, we believe we have the opportunity to once again modernize and disrupt our industry; we remain focused on execution in the areas of our business that can drive our growth even within the constraints of an overall weaker spending environment; the actions we are taking, on both reductions and investments, are focused on achieving long-term growth; while we have seen positive signs in our business, we remain cautious to the uncertainty that lies ahead; we remain committed to the execution of our growth and profitability strategy in pursuit of our long-term financial targets; we believe our strong balance sheet and cash position provide us the capability to keep our capital allocation priorities unchanged as we stay committed to shareholder value; expecting Q4 GAAP revenue to be in the range of $333 million to $363 million, expecting Q4 non-GAAP revenue, which adjusts for the impact of purchase accounting fair value adjustments related to OptimalPlus, to be in the range of $335 million to $365 million, and expecting that GAAP fully diluted EPS will be in the range of $(0.04) to $0.10 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.32 to $0.46; and included in our EPS guidance is a restructuring charge of $0.13 which relates to a reduction in our global workforce of approximately 9%. These statements are subject to a number of risks and uncertainties, including risks and uncertainties related to the COVID-19 virus and further economic and market disruptions resulting from COVID-19; further adverse changes or fluctuations in the global economy; further adverse fluctuations in our industry; foreign exchange fluctuations; changes in the current global trade regulatory environment; fluctuations in customer demands and markets; fluctuations in demand for NI products including orders from NI’s large customers; component shortages; delays in the release of new products; NI’s ability to effectively manage its operating expenses; manufacturing inefficiencies and the level of capacity utilization; the impact of any recent or future acquisitions or divestitures by NI (including the ability to successfully operate or integrate the acquired company’s business into NI, the ability to retain and integrate the acquired company’s employees into NI, and the ability to realize the expected benefits of the acquisition); NI’s ability to achieve the benefits of employee restructuring plans and possible changes in the size and timing of the related charges; expense overruns; and adverse effects of price changes or effective tax rates. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the year ended Dec. 31, 2019, its Form 10-Q for the quarter ended June 30, 2020 and the other documents it files with the SEC for other risks associated with the company’s future performance. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements.

All information in this release is as of the date above. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

About NI

At NI, we bring together the people, ideas and technology so forward thinkers and creative problem solvers can take on humanity’s biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day. (NATI-F)

LabVIEW, National Instruments, NI and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.


National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
	September 30,			December 31,
	2020			2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	197,319		$	194,616
Short-term investments	92,853			237,983
Accounts receivable, net	214,620			248,872
Inventories, net	209,558			200,410
Prepaid expenses and other current assets	72,956			65,477
Total current assets	787,306			947,358

Property and equipment, net	253,073			243,717
Goodwill	487,101			262,242
Intangible assets, net	183,067			84,083
Operating lease right-of-use assets	69,395			70,407
Other long-term assets	63,930			44,082
Total assets	$	1,843,872		$	1,651,889

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	48,886		$	52,192
Accrued compensation	53,496			47,732
Deferred revenue - current	116,871			131,445
Operating lease liabilities - current	16,177			13,431
Other taxes payable	41,604			40,607
Debt, current	3,500			—
Other current liabilities	50,259			20,716
Total current liabilities	330,793			306,123

Deferred income taxes	41,514			14,065
Liability for uncertain tax positions	6,867			6,652
Income tax payable - non-current	61,628			69,151
Deferred revenue - non-current	34,210			33,480
Operating lease liabilities - non-current	37,767			40,650
Debt, noncurrent	84,289			—
Other long-term liabilities	7,606			5,418
Total liabilities	$	604,674		$	475,539

Stockholders' equity:
Common stock	1,312			1,305
Additional paid-in capital	1,012,656			953,578
Retained earnings	247,970			242,537
Accumulated other comprehensive loss	(22,740		)	(21,070		)
Total stockholders' equity	1,239,198			1,176,350
Total liabilities and stockholders' equity	$	1,843,872		$	1,651,889


National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2020				2019			2020				2019

Net sales:
Product	$	269,651			$	305,247		$	809,890			$	882,747
Software maintenance	38,473				35,195			108,944				103,000
Total net sales	308,124				340,442			918,834				985,747

Cost of sales:
Product	88,370				84,127			254,236				240,056
Software maintenance	3,893				1,788			7,689				5,700
Total cost of sales	92,263				85,915			261,925				245,756

Gross profit	215,861				254,527			656,909				739,991
	70.1			%	74.8		%	71.5			%	75.1		%
Operating expenses:
Sales and marketing	109,774				113,922			330,939				352,340
Research and development	70,802				66,558			206,648				200,981
General and administrative	37,431				35,711			92,980				92,639
Total operating expenses	218,007				216,191			630,567				645,960
Gain on sale of business/assets	—				26,842			159,753				26,842
Operating income	(2,146		)		65,178			186,095				120,873
Other (expense) income:	(2,001		)		2,249			(2,584		)		5,379
Income before income taxes	(4,147		)		67,427			183,511				126,252
Provision for income taxes	475				15,783			44,588				22,697
Net (loss) income	$	(4,622	)		$	51,644		$	138,923			$	103,555

Basic (loss) earnings per share	$	(0.04	)		$	0.39		$	1.06			$	0.79
Diluted (loss) earnings per share	$	(0.04	)		$	0.39		$	1.06			$	0.78

Weighted average shares outstanding -
Basic	131,419				131,385			131,017				131,896
Diluted	131,419				131,889			131,671				132,890

Dividends declared per share	$	0.26			$	0.25		$	0.78			$	0.75


Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
	Nine Months Ended September 30,
	2020			2019

Cash flow from operating activities:
Net income	$	138,923		$	103,555
Adjustments to reconcile net income to net cash provided by operating activities:
Disposal gains on sale of business/asset	(159,753		)	(26,842		)
Depreciation and amortization	61,228			54,546
Stock-based compensation	42,556			38,054
Deferred income taxes	(932		)	(1,461		)
Net change in operating assets and liabilities	26,762			(18,507		)
Net cash provided by operating activities	108,784			149,345

Cash flow from investing activities:
Acquisitions, net of cash received	(334,981		)	—
Capital expenditures	(36,573		)	(47,183		)
Proceeds from sale of business/assets, net of cash divested	160,266			32,492
Capitalization of internally developed software	(2,806		)	(7,179		)
Additions to other intangibles	(1,045		)	(1,132		)
Acquisitions of equity-method investments	(7,502		)	(13,670		)
Purchases of short-term investments	(206,330		)	(141,074		)
Sales and maturities of short-term investments	351,597			204,046
Net cash (used in) provided by investing activities	(77,374		)	26,300

Cash flow from financing activities:
Proceeds from revolving loan facility	20,000			—
Proceeds from term loan	70,000			—
Payments on term loan	(875		)	—
Debt issuance costs	(1,480		)	—
Proceeds from issuance of common stock	24,971			25,823
Repurchase of common stock	(39,244		)	(137,171		)
Dividends paid	(102,396		)	(99,083		)
Net cash used in financing activities	(29,024		)	(210,431		)

Impact of changes in exchange rates on cash	317			(1,827		)

Net change in cash and cash equivalents	2,703			(36,613		)
Cash and cash equivalents at beginning of period	194,616			259,386
Cash and cash equivalents at end of period	$	197,319		$	222,773


The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles and fair value adjustments, acquisition-related transaction and integration costs, capitalization and amortization of internally developed software costs, restructuring charges, gains on sale of business/assets, and other that were recorded in the line items indicated below (unaudited) (in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2020			2019			2020			2019
Stock-based compensation
Cost of sales	$	1,051		$	904		$	2,787		$	2,587
Sales and marketing	5,184				5,231			16,826		14,745
Research and development	4,692				4,099			12,640		12,029
General and administrative	4,293				3,158			10,301		8,693
Provision for income taxes	(3,854		)		(2,128	)		(8,260	)	(7,904		)
Total	$	11,366		$	11,264		$	34,294		$	30,150

Amortization of acquisition-related intangibles and fair value adjustments
Net sales	$	1,299		$	—		$	1,299		$	—
Cost of sales	4,198				833			5,579		2,525
Sales and marketing	2,334				492			3,300		1,485
Research and development	28				28			84		84
Other expense (income)	121				124			363		285
Provision for income taxes	(1,658		)		(190	)		(1,948	)	(576		)
Total	$	6,322		$	1,287		$	8,677		$	3,803

Acquisition transaction and integration costs, restructuring charges, and other ^(1)(2)(3)
Cost of sales	$	(13	)	$	—		$	7		$	—
Sales and marketing	1,158				2,993			8,771		8,290
Research and development	374				244			5,190		899
General and administrative ⁽¹⁾⁽³⁾	10,210				7,998			12,595		9,525
Gain on sale of business/assets ⁽¹⁾⁽²⁾	—				(26,842	)		(159,753	)	(26,842		)
Other expense (income)	270				—			397		—
Provision for income taxes	(712		)		3,090			33,965		1,240
Total	$	11,287		$	(12,517	)	$	(98,828	)	$	(6,888	)
(1): During the third quarter of 2019, the company recognized a gain of $27 million related to the sale of an office building, presented within "Gain on sale of business/assets". The company also recognized a charitable contribution expense of $7 million related to an infrequent donation using a portion of the proceeds from the sale of the building, presented within "General and administrative".
(2): During the first quarter of 2020, the company recognized a gain of $160 million related to the divestiture of AWR, presented within "Gain on sale of business/assets".
(3): During the third quarter of 2020, we recognized $5 million of compensation expense related to the replacement of unvested options acquired from OptimalPlus. These amounts were accounted for as post-combination expense and will be recognized over the required service period.

Capitalization and amortization of internally developed software costs
Cost of sales	$	6,769		$	6,954		$	20,995		$	20,073
Research and development	302				(2,682	)		(2,794	)	(7,179		)
Provision for income taxes	(1,485		)		(897	)		(3,822	)	(2,708		)
Total	$	5,586		$	3,375		$	14,379		$	10,186


National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2020				2019				2020				2019

Reconciliation of Net sales to Non-GAAP Net sales
Net sales, as reported	$	308,124			340,442				918,834				$	985,747
plus: Impact of purchase accounting fair value adjustments	1,299				—				1,299				—
Non-GAAP net sales	$	309,423			340,442				920,133				$	985,747

Reconciliation of Gross Profit to Non-GAAP Gross Profit
Gross profit, as reported	$	215,861			$	254,527			$	656,909			$	739,991
Stock-based compensation	1,051				904				2,787				2,587
Amortization of acquisition-related intangibles and fair value adjustments	5,497				833				6,878				2,525
Acquisition transaction and integration costs, restructuring charges and other	(13		)		—				7				—
Amortization of internally developed software costs	6,769				6,954				20,995				20,073
Non-GAAP gross profit	$	229,165			$	263,218			$	687,576			$	765,176
Non-GAAP gross margin	74.1			%	77.3			%	74.7			%	77.6			%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Operating expenses, as reported	$	218,007			$	216,191			$	630,567			$	645,960
Stock-based compensation	(14,169		)		(12,488		)		(39,767		)		(35,467		)
Amortization of acquisition-related intangibles and fair value adjustments	(2,362		)		(520		)		(3,384		)		(1,569		)
Acquisition transaction and integration costs, restructuring charges and other	(11,742		)		(11,235		)		(26,556		)		(18,714		)
Capitalization of internally developed software costs	(302		)		2,682				2,794				7,179
Non-GAAP operating expenses	$	189,432			$	194,630			$	563,654			$	597,389

Reconciliation of Operating Income to Non-GAAP Operating Income
Operating income, as reported	$	(2,146	)		$	65,178			$	186,095			$	120,873
Stock-based compensation	15,220				13,392				42,554				38,054
Amortization of acquisition-related intangibles and fair value adjustments	7,859				1,353				10,262				4,094
Acquisition transaction and integration costs, restructuring charges and other	11,729				11,235				26,563				18,714
Net amortization of internally developed software costs	7,071				4,272				18,201				12,894
Gain on sale of business/assets	—				(26,842		)		(159,753		)		(26,842		)
Non-GAAP operating income	$	39,733			$	68,588			$	123,922			$	167,787
Non-GAAP operating margin	12.8			%	20.1			%	13.5			%	17.0			%

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes ⁽¹⁾
Provision for income taxes, as reported	$	475			$	15,783			$	44,588			$	22,697
Stock-based compensation	3,854				2,128				8,260				7,904
Amortization of acquisition-related intangibles and fair value adjustments	1,658				190				1,948				576
Acquisition transaction and integration costs, restructuring charges and other	712				2,587				2,794				4,437
Net amortization of internally developed software costs	1,485				897				3,822				2,708
Gain on sale of business/assets	—				(5,677		)		(36,759		)		(5,677		)
Tax reform charge	—				(2,774		)		—				(2,774		)
Non-GAAP provision for income taxes ⁽¹⁾	$	8,184			$	13,134			$	24,653			$	29,871
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Reconciliation of GAAP Net (Loss) Income and Diluted EPS to Non-GAAP Net Income, Non-GAAP Diluted EPS, and EBITDA
(in thousands, except per share data, unaudited)

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2020				2019				2020				2019

Net (loss) income, as reported	$	(4,622	)		$	51,644			$	138,923			$	103,555
Adjustments to reconcile net (loss) income to non-GAAP net income:
Stock-based compensation	15,220				13,392				42,554				38,054
Amortization of acquisition-related intangibles and fair value adjustments	7,980				1,477				10,625				4,379
Acquisition transaction and integration costs, restructuring charges and other	11,999				11,235				26,960				18,714
Net amortization of internally developed software costs	7,071				4,272				18,201				12,894
Gain on sale of business/assets	—				(26,842		)		(159,753		)		(26,842		)
Income tax effects and adjustments ⁽¹⁾	(7,709		)		2,649				19,935				(7,174		)
Non-GAAP net income	$	29,939			$	57,827			$	97,445			$	143,580
Non-GAAP net margin	9.7			%	17.0			%	10.6			%	14.6			%

Diluted EPS, as reported	$	(0.04	)		$	0.39			$	1.06			$	0.78
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
Stock-based compensation	0.12				0.10				0.32				0.28
Amortization of acquisition-related intangibles and fair value adjustments	0.06				0.01				0.08				0.03
Acquisition transaction and integration costs, restructuring charges and other	0.10				0.09				0.20				0.14
Net amortization of internally developed software costs	0.05				0.03				0.14				0.10
Gain on sale of business/assets	—				(0.20		)		(1.21		)		(0.20		)
Income tax effects and adjustments ⁽¹⁾	(0.06		)		0.02				0.15				(0.05		)
Non-GAAP diluted EPS	$	0.23			$	0.44			$	0.74			$	1.08
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Weighted average shares outstanding - Diluted	131,419				131,889				131,671				132,890


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net income, as reported	$	(4,622	)	$	51,644		$	138,923		$	103,555
Adjustments to reconcile net income to EBITDA:
Interest expense (income), net	560			(1,923		)	(2,608		)	(6,155		)
Tax expense	475			15,783			44,588			22,697
Depreciation and amortization	22,887			18,562			61,228			54,546
EBITDA	$	19,300		$	84,066		$	242,131		$	174,643
Weighted average shares outstanding - Diluted	131,419			131,889			131,671			132,890


Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS Guidance
(unaudited)
	Three Months Ended
	December 31, 2020

	Low		High
GAAP Diluted EPS, guidance	$	(0.04)	$	0.10
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:
Stock-based compensation	0.12		0.12
Amortization of acquisition-related intangibles and fair value adjustments	0.06		0.06
Acquisition transaction and integration costs, restructuring charges, and other	0.20		0.20
Net amortization of software development costs	0.04		0.04
Income tax effects and adjustments ⁽¹⁾	(0.06)		(0.06)
Non-GAAP Diluted EPS, guidance	$	0.32	$	0.46
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.


Reconciliation of GAAP Revenue to Non-GAAP Revenue, Guidance
(unaudited)
	Three Months Ended
	December 31,
		2020		2019		Percent Inc/(Dec)
		(midpoint)				Percent Inc/(Dec)
GAAP Revenue, guidance		$	348,000	$	367,468	(5	)%
plus: Impact of purchase accounting fair value adjustments		2,000		—
Non-GAAP Revenue, guidance		$	350,000	$	367,468	(5	)%

« Previous Page 1 | 2 | 3 Next Page »